Aug 28, 2012 (LBO) – Lanka Milk Foods, a unit of Sri Lanka’s Stassen group said it was eyeing former war zones in the north and east of the country for expansion, while it operated within complex state interventions. LMF’s imported milk business was hit by state price controls and import duties but it also has liquid milk and other products including two dairy farms which had made profits.

While the liquid milk sector was helped by protectionism, imported milk powder sector was hit by both price controls and higher tariffs.

“In fact, there were situations where the selling price was less than the price of importation, which badly affected the industry,” LMF chairman Harry Jayewardene told shareholders in the firm’s annual report.

“Even though global milk powder prices rose considerably, we were unable to increase prices locally in accordance with these increases as the Consumer Affairs Authority did not give us permission to make a price increase for a long time.

“This led to many milk powder brands curbing their advertising and promotional spend, as the returns generated did not justify the investments.”

“Your company has been fortunate that the falls in the powdered milk segment have been

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